Mortgage arrears decline further
I haven't done of these posts for a few years, but got so tired of reading about record mortgage stress in the media every month I thought it may be time to update a few graphs of actual arrears rates.
In FY2022 Australia's Prime SPIN 30+ day mortgage arrears fell to just 0.77 per cent (down from 1.12 per cent a year earlier).
The improvement was mainly driven by Western Australia, with most of the other states recording similarly low mortgage arrears rates.
There are some low-doc arrears as ever, but overall non-conforming arrears are at all-time lows.
And finally, investment loans continued to record materially lower arrears rates than homebuyer mortgages, as has generally been the case over the past dozen years.
Overall, arrears have been exceptionally low - all of which makes sense when you think through what's been going on over the past year or two.
Now the real test comes as the Reserve Bank is delivering the fastest pace of monetary tightening since 1994 - with more set to come - and a rush of fixed mortgage periods resetting over the 18 months ahead.
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Time for a pause?
Housing finance fell back -8.5 per cent last month (investment loans were down 11.2 per cent), and private new capex missed to the downside by delivering another negative quarterly result, although future investment plans remained solid.
Over the past couple of weeks the retail figures were surprisingly strong (perhaps in part driven by overseas arrivals), but almost everything else has been softer (credit growth), weak or contracting (manufacturing gauge), outright poor (decline construction work done), or very poor (building approvals).
Inflation is above target at the moment - and even though inflation expectations have been falling, interest rate hikes are the order of the day to increase unemployment and slow demand in the economy.
But given the inflation has been largely driven by global supply chain and energy factors, it's questionable how much additional benefit will be derived from further interest rate hikes beyond next month's expected hike.
